2013 marks another good performance for frozen food packaging in Europe, with volume sales set to rise by 2%. Uncertain economic conditions are enabling packaging in this category to perform better than in chilled foods or dried and canned/preserved alternatives, with consumer demand for good value being a strong driver behind this achievement.
Despite this overall positive picture, the industry faces several challenges in sustaining growth to 2017. Aside from low household penetration of freezers in Eastern Europe, brand owners operating in the frozen food category also need to address the need for greater product convenience on that side of the region, as well as consumer demand for more premium, healthier and more authentic products in the West. The packaging industry has the tools to work with in meeting most of these needs in the form of flexible packaging and folding cartons, along with steam-in-bag technology.
A positive yet challenging picture
Europe remains a major target region for both frozen food brand owners and packagers, accounting for a total 45% unit volume share of global frozen food packaging demand. With volume sales of 19.9 bn units, Western Europe is the leading region globally for frozen food packaging in 2013. The region’s volumes, however, have risen by a mere 240 million units on the previous year, whilst Eastern Europe’s 6.4 bn units equate to a larger increase of an additional 276 million units on 2012. Lower saturation levels and growing incomes are encouraging the more rapid expansion of the frozen food market in Eastern Europe. Germany, the UK and France account for a large share of frozen food packaging volumes in Europe. The leading Western European manufacturer, Iglo Bird’s Eye Frozen Foods, continues to grow with a retail value share of 7.1% in 2013. In Germany, frozen pizza is a food item commonly picked up by the many consumers shopping at discounters such as Aldi and Lidl.
In the UK, potatoes and fish, the key items needed to prepare the traditional dish of fish and chips, offer packaging its best unit volume growth prospects over 2013-2017, while in France other frozen foods such as herbs and spices, savoury crepes and snacks are all driving growth in the category. Italy and Spain may see lower unit volume gains over the same period but growth in these countries will be led by frozen pizza and vegetables. Frozen food packaging in Eastern Europe also boasts some significant unit volumes along with annual forecast percentage growth that is above any country in Western Europe. Current growth in demand and prospects in Eastern Europe are being led and heavily influenced by Russia, which accounts for almost 80% of the region’s total sales. Although competition is intensifying in Russia, the country’s frozen food industry remains largely orchestrated by local brand owners such as Kachestvennye Produkty ZAO and Velkom MPZ.
In contrast, Poland, the second biggest market in Eastern Europe, is seeing foreign end product manufacturers such as the American McCain Foods Ltd and the French Bonduelle Groupe SA putting pressure on local players. The prospects for frozen food packaging will, however, be largely determined by freezer and fridge-freezer ownership. While household possession of freezers in Western Europe is around 50%, it stands at just 18% in Eastern Europe, and is expected to rise to only 19% by 2017.
Western Europeans seek convenient packaging
The first thing to take into account in Western Europe is what consumers of frozen food are choosing to buy. Frozen pizza is experiencing significant success owing to its rapid preparation. In other words, it is both a convenient and tasty meal solution. Frozen vegetables and potatoes also rank high as growth categories, benefiting demand for flexible plastic, the most popular pack format. These are increasingly being used as accompaniments to homemade meals as the cocooning trend continues to characterize Western Europe following the financial crisis.
An examination of forecast packaging volume growth by pack format in Western Europe over 2013-2017 is also a good indication as to what consumers will primarily be buying in the near future. The folding carton is set to continue to be the best performing pack type, constituting a slightly higher-end solution to standard flexible plastic, which is often associated with a mid-end or economy positioning. With a wide choice of packaged foods available and various health concerns, Western Europeans will indeed be increasingly looking for higher quality from their frozen food choices. Quality levels should also be reflected in the packaging materials used. In Italy, in 2012, gluten-free food manufacturer Dr Schär, for instance, released its Focaccia al Rosmarino Senza Glutine in a 300g folding carton, targeted at gluten-intolerant consumers. This is not to say that flexible plastic is being sidelined; on the contrary. This pack type continues to attract interest, especially with the increasing appeal of steam-in-bag technology. Steaming is a cooking process which is becoming increasingly popular in Western Europe.
Steaming is emerging as a rival to frying due to being healthier and enabling food to better maintain its nutritional content. In France, major brand Iglo has launched Papillote Océane, a frozen fish product directly packed in a 250g single-serve flexible plastic pack which can be heated from frozen within five minutes. Microwavable plastic pouches are also emerging, albeit from a low volume base, offering a glossy look while also representing a step up from flexible plastic. The most widely used pack size in Western Europe, 300g, also mirrors the importance of single-serve portions and convenience stores on this side of the continent. In France, for instance, convenience stores have seen rapid expansion thanks to the likes of the Carrefour City chain. Products such as the Penne all’ Arrabbiata Monoporzione frozen ready meal from Picard, packaged in a 300g ready meal tray with a printed lid, enable quick and easy access to the product. This is just one example of the many and growing number of ready meal offerings which aim to meet the rising demand from consumers in French cities.
Value for money in Eastern Europe
In Eastern Europe, a combination of low saturation levels, growing incomes and strong retail development is enabling sales of frozen food packaging to grow far more dynamically than in the West. The ready meals category is largely driving this unit volume growth in 2013, which is also set to continue to 2017. The widening choice available and the general rise in popularity of ready meals are serving to meet widespread desire from consumers to save time when it comes to meal preparation. For packaging manufacturers, however, emphasis should be put on conveying value for money without impeding brand visibility in store. Flexible plastic is expected to account for the largest share of packaging volume growth to 2017. The typically low-cost flexible pack is a good fit for economy and mid-priced frozen foods, and reflects the importance still placed on value for money in Eastern European markets. Folding cartons rank second in terms of forecast unit volume growth, with their good printability able to help brand owners create a higher quality positioning among the many flexible plastic packs already available in frozen cabinets. The most common pack size found in Eastern European frozen cabinets, 400g, is bigger than that in Western European markets, thus underlining the need to increasingly cater for families or medium to large households.
Packaging: an ally in the future
Over 2013-2017, Western Europe will continue to be instrumental to packaging volume growth in frozen food. Packaging for chilled processed food is, however, anticipated to grow faster than that of frozen food. High levels of maturity and intense competition from chilled foods on this side of Europe will require frozen food manufacturers and packagers to create excitement among consumers, with a focus on delivering a high-quality experience both in terms of product taste and pack functionality. Eastern Europe will represent safer ground for forecast packaging volume increases, in particular Russia, although differentiation through packaging will also become increasingly key in these countries as the market becomes more developed and competitive.